Germany's Federal Ministry of Finance is examining changes to takeover laws following recent moves by UniCredit at Commerzbank and British textile holding Frasers at Hugo Boss. A coalition insider stated that the government aims to put forward a legislative draft in 2026, with the Bundestag potentially deciding on it in the first half of 2027.
Experts point to weaknesses in German rules, noting that a bidder who crosses the 30 percent threshold in a target company has largely free rein to increase their stake toward a majority. UniCredit presented an unattractively priced takeover offer before reaching 30 percent, then used derivatives to jump from just under 30 percent to 49 percent. This stake is sufficient to take over the supervisory board and replace the management board at an annual general meeting, as UniCredit CEO Andrea Orcel indicated. British billionaire Mike Ashley used a similar tactic at Hugo Boss via Frasers, accumulating derivatives to secure 30 percent before launching a takeover offer with a 4% premium. Italian media group MFE attempted a similar approach at ProSiebenSat.1.
Baker McKenzie partner Dirk Horcher noted that Germany currently grants bidders extensive freedoms, with the next hurdle after 30 percent sitting at 75 percent for a domination and profit-and-loss transfer agreement. Latham & Watkins partner Heiko Gotsche stated that low-ball offers typically work for strategic investors rather than private equity, which requires patience. Horcher recalled a similar maneuver 16 years ago by Spanish construction group ACS at Hochtief, noting that Germany's takeover law dates back to 2002 and was last adjusted in 2006.
As potential solutions, experts point to the British model, where a bidder holding over 30 percent who continues to buy shares after a takeover offer must make a fresh offer to remaining shareholders. In Germany, by contrast, a bidder can continue buying freely on the market, with mandatory adjustments applying only if another package is acquired off-exchange within 12 months at a higher price. Horcher views the British model as the best solution, suggesting it would motivate bidders to set a minimum acceptance threshold of 50 percent from the start. Paul Maares of the DSW shareholder association noted that requiring a new offer for those wanting to increase stakes between 30 and 50 percent could act as a deterrent due to higher financing risks.
Gotsche expects the Federal Ministry of Finance might alternatively consider introducing a second threshold at 50 percent that triggers another takeover offer, similar to the rule in Finland. Experts remain divided on how to handle cash-settled total return swaps, which do not count toward mandatory offer triggers but grant practical access to underlying shares. While Gotsche suggests the federal government could consider addressing swaps quickly, Horcher views including them in the 30-percent calculation as problematic.
Lawyers recommend that lawmakers consider loosening regulations at the end of the process in exchange for tighter rules at the beginning, citing rigid German rules protecting minority shareholders against majority holders exceeding 75 percent. Horcher criticized that international comparison protections primarily benefit hedge funds rather than retail investors, while DSW's Maares warned that reducing these protections would leave free floats insufficiently protected and open the door to abuse.
